The People’s Bank of China (PBoC) looks set to enter a new era of money and payments. It won’t be off the back of Bitcoin, but rather a digital currency built and developed by the central bank over the last five years.
China has been quite the trendsetter in the world of cryptocurrencies. It was the first to stamp down hard on ICOs; they blocked access to cryptocurrency exchanges and did all they could to quash the decentralized financial revolution.
The problem for the Chinese regulators was never the technology, or what it could do; it was a question of control. Thus, the PBoC’s digital currency is now “close to being out,” Mu Changchun, deputy director of the PBOC’s payments department, said.
Control is indeed the central facet of this new Central Bank-borne cryptocurrency. Facebook’s Libra cryptocurrency sent ripples of discontent through the financial world, threatening the sovereignty of many Central Banks, including China’s.
The whispers of Libra reportedly spurred on the PBoC to get their controlled cryptocurrency at the ready to give Beijing a stronger hold over the financial system, especially the M0 money supply – that is, cash.
Changchun, speaking at an event held by China Finance 40 Forum, spelled out the Central Bank’s intentions with their new cryptocurrency. The PBoC hope to see it as a replacement for cash, which is a smart move in a world that is going fully digital – but also offers that little bit more control.
The way this digital currency will work, according to the filed patents, is similar to what most people know with Bitcoin. Citizens will download a mobile wallet to swap their Yuan for digital money. This digital currency will then be useful for making and receiving payments. But the crux of it all is that the PBoC could also track every time money changes hands.
China’s manifesto when it has come to this emerging technology, and its associated tokenomics, has always been in favor of the blockchain over Bitcoin. It is unsurprising that the president, Xi Jinping, was quoted as saying that blockchain technology will be at the forefront of the fourth industrial revolution.
Many have wondered how the country would be able to separate Bitcoin from blockchain, an impossibility in the minds of ardent Bitcoin maximalists. However, the harsh regulations put in place early from China appeared to have worked.
China was once the powerhouse of Bitcoin transactions, but, it was reported in July last year that their local currency, the Yuan, was accounting for a mere one percent of trades in the global Bitcoin market.
On the other side of things, China is streaks ahead in the blockchain innovation stakes, something that may be worrying the US and other rivals, especially if a technology arms race is on the cards.
So it appears as if China may have found a way to split the token from the tech, but it involves bringing in their own token, sans the decentralization, of course.